KG Petrochem Receives 'Hold' Rating from MarketsMOJO After Positive Results, But Long-Term Growth Remains Weak

KG Petrochem, a microcap company in the textile industry, has recently received a 'Hold' rating from MarketsMOJO on September 27, 2024. This upgrade comes after the company reported positive results in June 2024, with a growth of 152.94% in PBT LESS OI(Q) at Rs 1.08 crore and 297.0% in PAT(Q) at Rs 1.95 crore.
Technically, the stock is currently in a Mildly Bullish range and has shown a 2.14% return since September 26, 2024. The Bollinger Band, a key technical factor, has also been Bullish since September 26, 2024.

With a ROCE of 0.8, KG Petrochem is currently trading at an attractive valuation with a 0.8 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations. However, the company's long-term fundamental strength is weak, with an average ROCE of 7.24% and poor growth in net sales and operating profit over the last 5 years.

Additionally, KG Petrochem has a high Debt to EBITDA ratio of 3.52 times, indicating a low ability to service debt. In the last 1 year, the stock has underperformed the market, generating a return of only 2.36% compared to the market's return of 40.53%.

Overall, while KG Petrochem has shown positive results in the short term, its long-term growth and fundamental strength are concerning. Investors may want to hold off on investing in this microcap company until there is a significant improvement in its financials.